How Ontario is winning the war on coal (according to an American)

Daniel Gross, Slate | August 7, 2014 | Last Updated: Aug 7 12:12 PM ET

Canadians aren’t known for boastfulness. Recently, though, the government of Ontario couldn’t help beating its chest a little. In April, eight months ahead of a schedule plotted 11 years ago, Ontario’s energy ministry announced the closing of the Thunder Bay coal-generating plant, on the shores of Lake Superior. “The Thunder Bay Generating Station, Ontario’s last remaining coal-fired facility, has burned its last supply of coal,” Ontario’s energy ministry stated. The action, it noted, ensured that Ontario, which 10 years ago relied on coal for 25% of its electricity, “is now the first jurisdiction in North America to fully eliminate coal as a source of electricity generation.”

Ontario is, of course, not a hippy-dippy microeconomy. It’s Canada’s most populous province, home to 13.5 million people and about 36% of Canada’s population. It houses large cities—like Toronto and Ottawa—and heavy industry, along with vast, lightly populated territories that stretch to its north

Canada has no national strategy to rid its pristine air of toxic coal emissions; Ontario has no carbon tax, cap-and-trade system, or emissions cap. Eliminating coal was part of the platform of Dalton McGuinty, the Liberal Party politician who was elected premier of Ontario in 2003, and who was re-elected in 2007 and 2011. Rather than rely on punitive taxes or blunt caps, the strategy rested on boosting supplies of existing emissions-free power and pushing conservation aggressively. It was sold as both an environmental and a fiscal fix. In Canada, the government pays for health care—and a 2005 study commissioned by the government pegged the health care costs associated with coal generation at $3 billion annually.

The dominance of a single party dedicated to a legislative goal was the precondition for Ontario to phase out coal. But Ontario also had some natural advantages and resources that its neighbors in Canada and the U.S. lack.

Ontario’s reliance on coal—for about 25% of generation—was less severe than that of many other areas. (In the U.S., coal still accounts for about 35% of generation.) That’s because Ontario had a long-standing, huge, built-in base of two sources of emission-free, nonintermittent power: nuclear and hydro. In 2003, these two sources accounted for a majority of electricity production in Ontario. So a major campaign in Ontario’s war on coal was boosting the output of existing noncoal facilities. Ontario Power Generation owns two huge nuclear plants with a combined capacity of 6,600 megawatts. Since 2003, Bruce Power, which operates a massive nuclear plant near Lake Huron, has refurbished and placed back into service two of its units. Today, Bruce Power’s eight units make it the “world’s largest operating nuclear site” with a capacity of about 6,300 megawatts.

Ontario also has a huge amount of hydro resources. The Sir Adam Beck plant, which harnesses the power of the water tumbling over Niagara Falls, was upgraded in 2005. In 2013, a giant tunnel that funnels even more water to the plant was completed. To the north, several expansions of the Lower Mattagami River complex, a partnership between Ontario Power and the Moose Cree First Nation, will add up to 440 megawatts of hydro capacity when it is completed next year, essentially doubling that region’s power output.

By 2013, nuclear (56%) and hydro (22%) accounted for a total of 78% of Ontario’s electricity production. These emissions-free sources are actually quite cheap compared with coal. Bruce Power says the average cost of the power it produces is only 5.8 (Canadian) cents per kilowatt-hour.

Renewables, which are often sold as a way to displace fossil fuels, have played a smaller role. For the last several years, Ontario has maintained feed-in tariffs, which guarantee producers of renewable energy a fixed price. From essentially zero, wind and solar have risen in 10 years to account for 3%and 1% of Ontario’s electricity production in 2013, respectively. And rather than mothball the 51-year-old Thunder Bay plant, Ontario is planning to convert it so it can run on wood pellets, which are regarded as a renewable resource.

The most efficient power plant, the cliché goes, is the one that doesn’t have to be built. As Ontario’s 2013 energy report shows, reduction in demand—through conservation incentives, efficiency, and new standards for buildings and appliances—has helped sap the need for coal-fired energy production. “Through conservation, Ontario homeowners, businesses and industry have saved more than 1,900 megawatts of peak demand electricity since 2005—the equivalent of more than 600,000 homes being taken off the grid,” the report notes. In 2013, Ontario calculated that successful efforts to reduce electricity use below established baselines accounted for about 5% of total consumption. Put another way, efforts to permanently reduce demand for electricity alone allowed Ontario to remove about 20% of its coal capacity.

Having eliminated coal, the government is now trying to drive a stake through its dead carcass. Last year, Ontario introduced the Ending Coal for Cleaner Air Act, which would bar coal from being used at mothballed facilities or at newly constructed ones.

Could it happen here? The same dynamic—a general bias against coal, the availability of natural gas and renewables—is leading to a similar rout of coal in areas that border Canada. In Maine, which relies heavily on natural gas, hydroelectric power, and the burning of wood to produce electricity, coal accounted for just 0.3% of electricity generation in 2012, down from 3%in 2002. In New York, an industrial, highly populated state that shares a long border and water resources with Ontario, a similar process has taken place. As natural gas became abundant and cheap, the Empire State kicked coal to the curb: Between 2000–2012, the percentage of electricity in New York provided by coal fell from 18.1% to 3.4%. And that was before the Cuomo administration kicked off an effort to promote renewables. Who would have thought New York could take cues on aggressiveness from its mild-mannered neighbor to the north?

Daniel Gross is a longtime Slate contributor. His most recent book is Better, Stronger, Faster

Win the war on coal, lose the war on business investment.

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